Benefit cuts: Wealthier pensioners face losing winter fuel allowance and free television licence, says George Osborne

 

Better-off pensioners face losing benefits such as winter fuel allowances and free television licences after George Osborne said the country needed to look at whether they could still be afforded.

All three main parties are now reviewing the future of universal hand-outs for older people amid suggestions that over-65s have been sheltered from the pain of austerity measures in recent years.

David Cameron pledged during the 2010 general election campaign that pensioner benefits would be safeguarded over the lifetime of the parliament, which ends in 2015.

But his Chancellor refused in an interview with BBC1’s Andrew Marr Show to extend the commitment to cover the years after the next election as he acknowledged that universal benefits would have to be reviewed.

He said: “When it comes to pensions and pensioner benefits, our society is getting older, we’re going to be spending more on our older people. I want to make sure that is sustainable.”

Mr Osborne said the best way to bear down on the costs of an ageing population was to raise the state pension age, which is due to rise to 66 in 2020 and to 67 in 2028.

He stressed the value of the state pension would be protected, but added: “All those other pensioners’ benefits – yes, of course, we’ve got to look at how we can afford them.”

The cost of the winter fuel allowance – £200 for homes with someone aged 61 or over, increasing to £300 for a household with an over-80 – is more than £2bn.

All homes with someone over the age of 75 are entitled to a free licence at a cost of about £600m, while the cost of free bus travel for pensioners is estimated at more than £1bn.

Restricting winter fuel payments and free TV licences to claimants on pension credit could save around £1.4bn a year while taxing the benefits would raise about £250m.

Nick Clegg has questioned why “millionaire” pensioners should carry on receiving universal benefits and has been backed by Iain Duncan Smith, the Conservative Work and Pensions Secretary, who has also suggested wealthier pensioners give back their money.

Ed Miliband, the Labour leader, said this year that the principle of universal benefits for older people “needs to be looked at”, while Ed Balls, the Shadow Chancellor, recently committed the party to saving £100m a year by scrapping winter fuel payments for higher and top rate taxpayers.

Any such moves are politically tricky as the over-65s vote in larger numbers than any age group and any government that scaled back on their benefits would risk a backlash at the ballot box.

Mr Cameron has repeatedly said he will keep his promise not to trim pensioners’ benefits during the course of this parliament. Aides have admitted that backtracking on that pledge would haunt him, saying it would be similar to Nick Clegg’s change of heart of university tuition fees.

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